Venue:
MTA HTK 1097 Budapest Tóth Kálmán u. 4. fszt. K13-14

The massive waves of migration that have emerged as part of the recent
globalization process have attracted increasing attention in the field of
economic geography. Traditionally, empirical research on this issue has
focused on the possible substitution effect between native and foreign
workers in the labour market. However, this evaluation omits the potential
positive spillovers derived from a greater cultural diversity related to
immigration. The aim of this work is to fill this gap by analysing the
impact that immigrant diversity has on wages in Spain. To do so, we built
three different indexes that measure cultural diversity across the Spanish
regions. We control for the problem of potential simultaneity between
migration and wages using instrumental variable techniques. We also
consider the role of the increasing entry of foreigners coming from
developed economies and other local factors. The results confirm that a
greater diversity of immigrants; birthplaces is associated with
higher wages for both natives and the total population. Moreover, our
findings reveal the importance of skilled labour (national or foreign), to
encourage workers; productivity and to ensure sustainable economic
development.